Arizona Tax Recovery

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The Arizona Department of Revenue is giving taxpayers an opportunity pay back taxes owed to the State without penalty from September 1 through October 1, 2011. ADOR spokesman Anthony Forschino explains the Tax Recovery Program.

Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. Starting today through October 1st, the Arizona Department of Revenue is sponsoring a "tax recovery" program. Here to explain what that means is the department's Assistant Director Anthony Forschino. Thanks for joining us.

Anthony Forschino: Thanks for having me.

Ted Simons: All right. What exactly are we talking about?

Anthony Forschino: It's a program where people who either have not filed their tax returns for years or under-reported their taxes have the ability to come in this month, pay those and have to pay it by October 1st and if they pay those, they get no penalties and the interest is reduced to like a 3% straight simple interest.

Ted Simons: What penalty would be otherwise?
Anthony Forschino: It would be up to 25%.

Ted Simons: That's a good deal.
Anthony Forschino: Yes.

Ted Simons: This is an amnesty program that says whatever you owe, forget about it -- no, can't forget about it. You've got to pay it.

Anthony Forschino: It has to be paid by October 1st.

Ted Simons: Typical transgressions addressed here what do people do the most?

Anthony Forschino: I think you see a lot of people who couldn't pay and ended up not filing for a year, didn't pay the next year, started to snowball and I'm too far into this, I don't know what to do. Well, this is the time to get back.

Ted Simons: And deduction mistakes, that sort of thing?

Anthony Forschino: Forgot to add a 1099 you didn't realize you had and things like that.

Ted Simons: What about federal returns? If there's a mistake, I know -- it's complicated but tied to the state -- does it matter if the federal return is all messed up. Is that a factor here?

Anthony Forschino: Not really. The federal has nothing in the sense of the program, but, yes, if you change your federal return, Arizona's return would be changed too. But if you're doing it at the same time and it's an underpayment, you can get in the amnesty within the month.

Ted Simons: Are we talking individuals here or businesses?

Anthony Forschino: We are talking individuals, businesses, TPT, tax withholding. Everything really but property and a state tax.

Ted Simons: I was going to say it looks like a lot of things re covered. What's not covered? Property, estate taxes?

Anthony Forschino: Property is not, yeah.

Ted Simons: And estate --

Anthony Forschino: And we don't have estate taxes.

Ted Simons: Anything else that would often be a mistake but is not be covered here?

Anthony Forschino: That's about it. It covered all of the tax -- luxury cases.

Ted Simons: Criminal cases though? Not there…

Anthony Forschino: Criminal are not allowed. If you've been in a criminal case, you're not allowed in the program and not allowed if you have a final audit or in collections, any of that is not part of it.

Ted Simons: If you're working out a payment schedule, if you're already dealing with the problem, is the amnesty still allowed?

Anthony Forschino: No, the amnesty is not for the existing liabilities.

Ted Simons: What's the reasoning?

Anthony Forschino: It's a win-win situation. The state gets the money upfront and the people in the door now and not only do that, but gets them back on the rolls. If they come in, they're going to continue to file and give the break for the taxpayers.

Ted Simons: Ok,30 days?

Anthony Forschino: 30 days.

Ted Simons: From today -
Anthony Forschino: From today.
Ted Simons: And what years does it covers. What years.

Anthony Forschino: it covers through 2004-2009.

Ted Simons: It seems to me like we've done this before. I've heard about this before, correct?

Anthony Forschino: We did -- we've done a couple. One in 1982. One in 2002 and then one in 2009.

Ted Simons: How successful were they?

Anthony Forschino: The 2000 -- I don't remember what happened in 1982, but I know in 2002, we got $73 million and 2009, about $25 million.

Ted Simons: Considering 2009 was $25 million, are you expecting that much this go-round?

Anthony Forschino: We don't know. It's hard to tell. The thing is if you knew who weren't paying tax, we'd just get them.

Ted Simons: Right. We have the website up there. And that's where people can go for more information.

Anthony Forschino: The forms and interest calculators, everything on there.

Ted Simons: And I know some are saying, geesh, I don't think I did something right. But I'm afraid to come forward, because if I do, someone will get me. Is that a valid concern?

Anthony Forschino: No, it isn't. This is just a come forward and do it, we wouldn't even audit those particular items.

Ted Simons: And there's the website, as far as for more information. While I've got you, we did a story a while back and "The Republic" first reported it. The idea of the use tax and buying something online or buy something you don't pay taxes on, you're supposed to pay state taxes anyway and there's a line on the return now for you to put how much what you purchased cost. Am I right on this? What's going on?

Anthony Forschino: It's a use tax and there's a couple of different reasons for what it is. But a use tax is a tax that went into effect in 1955, ok? What it is - it was basically the -- if you have a sales tax, people pay sales tax in the state, this is for those out of state that would be selling into the state, so that it doesn't give them a competitive advantage over those in the state. Why should somebody in the state -- let's say you go down the street and look at a bed, ok. I want to buy it. It's $2,000. When I go home, go online and find that bed again for $2,000 with no shipping, I'm going to buy it from them. I just competed against the people in the state. And that's why the use tax.

Anthony Forschino: They've always been -- always been payable. In the tax return, we've had something that says you owe use tax, here's how you pay it. This is the first year that it's going to be on the tax return. We're the 34th tax to do that. It's not new to tax returns, but --

Ted Simons: Does anyone do this? I mean, it sounds like --

Anthony Forschino: One of the taxes that nobody really realizes they owe.

Ted Simons: Yeah, so basically --

Anthony Forschino: Because somebody might say, hey, that transaction I made online is not taxable. It is, either to the person who sold it or to you who purchased it.

Ted Simons: We had a tax expert on. Even if you don't buy something online, might want -- if it's blank, is it a red flag?

Anthony Forschino: If you don't owe it, don't do something to try and owe it. If you don't owe it, don't put anything on that line. You have to remember, 2,800,000 people filing.

Ted Simons: Just be honest, in other words. That's a new one. Will this impact the recovery program?

Anthony Forschino: No.

Anthony Forschino: Use tax is part of it, so if you did owe use tax and came in for recovery, you could do that without the interest but right now, all we're looking at is the coming up year. It's on the tax return, you may have had to file before, we're looking at what's happening now.
Ted Simons: For something that's been around since 1955, I've got to tell you, there were a whole bunch of folks who had no idea this existed.

Anthony Forschino: We're going to put a whole facts sheet on the website. That kind of explains use tax and what it means and gives examples if you buy certain things. If you buy things online, there's no tax, never was a tax, like if I buy from you, that's a casual sale. Don't worry about a use tax in that situation. It's on if you bought online from a catalog --

Ted Simons: Good information. Good to have you here. Thanks for joining us.

Anthony Forschino: Thank you.

Anthony Forschino:ADOR spokesman

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